Now Google needs to write a check for Foursquare, before it's too late.

Google missed the social revolution. Google should buy Twitter to address this problem, but Twitter has gotten so huge and self-sufficient that it would take an absolutely monster check to pry it loose. Google may end up buying Twitter anyway, down the road, when Twtter is ready to sell to someone, but by then the acquisition could cost tens of billions of dollars (or nothing, depending on how good a business model Twitter can develop).

In the meantime, Google should buy Foursquare, which will vault Google into the leading position in the next wave of consumer Internet development: location-based services.

Based on history, it seems safe to say that whatever Google builds to try to compete with Foursquare will probably flop. Social stuff just isn't part of Google's DNA (Orkut, etc.) Even Facebook's attempt to compete with Foursquare appears to be off to a slow start, and Facebook's core competency is a lot closer to Foursquare's than Google's is.

How much would it cost Google to buy Foursquare?

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Probably $1 billlion or more.

Dennis Crowley, Foursquare's founder, has already sold one company to Google (Dodgeball), and it was a disaster. So he presumably has no intention of doing so again.

But everyone has his price. And if Google structures the deal, properly, it should be able to allow Dennis to continue to build the company without having to worry that Google will screw it up (a la Dodgeball).

(To do this, Google would have to agree to let Dennis build the company on its own, using Google and Gmail primarily as a distribution platform).

Wouldn't $1+ billion be an absolutely outrageous amount of money to pay for a tiny company like Fourquare that might get squished by Facebook?

Buying the leading position in location-based services would cost Google a month or two of cash flow. Google's shareholders would never miss it.

And Foursquare's outcome will likely be binary. It will either lose a step and fail and end up being worth zero. (MySpace). Or it will become global and huge and end up being worth tens of billions (Facebook, Twitter, maybe YouTube). So trying to price it "accurately" at this stage is a fool's game.

Google was smart to take the risk and buy a year-old YouTube for $1.6 billion, and then let YouTube do its thing. The YouTube deal worked out--YouTube is likely worth much more than this today--but even if it hadn't, buying it was a smart call.